The report describes 2013 as a "tipping point." More and more business owners are recognizing the need for protections like Cyber Liability Insurance, although small-business owners still need to catch up to their corporate counterparts, in both awareness and coverage.

According to the report, "the smallest companies (revenues less than $250 million) still viewed cyber risk less seriously than their largest counterparts (revenue greater than $10 billion)."

In order to provide top-notch services, consultants must be privy to a wealth of client information. And if this information could is compromised in a data breach, you could have a costly lawsuit on your hands.

That's where Cyber Liability Insurance steps in. When your business's network is hacked, phished, pharmed, or otherwise compromised, Cyber Liability Insurance helps you pay for the fallout. It can be purchased as a separate policy or bundled with your Business Owner's Policy. Read on to learn more.

What Is Cyber Risk?

Consultants: What Is Cyber Risk?

Cyber risk is the likelihood that an unauthorized person will gain access to your business's secure client data. When this happens, it's called a "data breach" or "cyber attack." These types of exposures can leave your clients vulnerable to identity theft and other kinds of security fraud.

As we alluded to earlier, many independent consultants don't realize that cyber criminals are interested in their data. But cyber criminals understand that smaller businesses usually don't have the type of security systems in place that their larger counterparts can afford. According to Verizon's Data Breach Investigation Report [PDF] , nearly 80 percent of data breach incidents are "crimes of opportunity" — that is, they could have been prevented with basic security measures.

And a data breach is not cheap. The Ponemon Institute's 2013 Cost of Data Breach Study found that the average cost of data breach in the United States was $188 per record and $5.4 million per breach — numbers that could spell disaster for most independent consultants.

Cyber Liability Insurance Protects

How Does Cyber Liability Insurance Protect Consultants?

Once a consultant's data has been compromised, there's really no way to retrieve it. In fact, it may take weeks or months for the breach to come to your attention, and by that time, the damage has been done.

Because of this, Cyber Liability Insurance is designed to help you pay for the "damage control" aspect of a data breach. Take a look at some of the expenses Cyber Liability policies can cover:

Cyber extortion expenses. When a cyber criminal holds your information "hostage" for a fee, it's called "cyber extortion." Benefits from your Cyber Liability Insurance can help pay the ransom.

Legal expenses. If your clients suffer a loss after a data breach, they may have grounds to sue. Even if you settle out of court, you'll still need to hire a lawyer to help you present your case, and that can get pricey. Your Cyber Liability coverage can help you pay for legal bills as well as the cost of judgments and settlements.

Notifying clients. After a data breach, you'll have to notify each client whose information could have been compromised. This can take some time, which is why your coverage helps you shoulder the associated costs.

Credit monitoring services. Offering your clients credit monitoring services can go a long way toward restoring their faith in your firm. Cyber Liability Insurance can help you pay for this gesture.

A marketing campaign. One of the biggest blows a data breach can cause is damage to your reputation, which can affect your ability to secure new client contracts. Your coverage can help you pay for a good-faith marketing campaign to help your business get back in your community's good graces.

Cyber Liability Insurance is still a relatively new product in the insurance world. Premiums tend to vary considerably from provider to provider, which means there's a good chance you'll be able to snag a deal on coverage if you work with an agent familiar with finding coverage for consultants in your line of work.